Tuesday, July 17, 2007

I have a new measure for judging the Bend housing market. Listen to Brooks Resources. They obviously have an institutional memory of past booms and busts, which the rest of the developers are lacking. Except, I would probably take their stated 'public' timeline, and double it (as internally, they probably do.)

It's not in their best interest to predict armegeddon, but they are the only local resident developers willing to admit there is much of a problem at all -- and its telling that they are also the oldest and most experienced.

The declines mentioned in the Bulletin are for the last year, of course, but the graphs clearly show the huge declines from the year before that, too.

The median prices are a mystery to me, but unsold houses aren't profitable to anyone, no matter what the price. I suppose prices are sticky and lagging, and will yet come down. Or the inherent building prices of material, labor and land conspire to keep prices up despite a lack of demand.

Condo's are selling? Well, I'd love to know what percentage of the condos built or being built are selling instead of the raw numbers. Still, these are second home buyers, I'm guessing, and people either not here until after retirement or only here for vacations. Not a healthy market for Bend. I think they haven't gotten the word yet that Bend is about to lose its superpowers and become a shlub.

4 comments:

Anonymous said...

I have a new measure for judging the Bend housing market. Listen to Brooks Resources.

**

Listen to no one in Bend, watch what they do. Brooks has been killing just about every project they have during the past year.

They certainly know about inventory. They know its going to take a generation to clear the glut.

I really like the slant on the article that things will fix themselves in 2-3 years. Yes, the next 2-3 years are going to be tough, because that's when the resets and foreclosures need to be purged, and all those who shouldn't have bought second homes in Bend will lose them.

The real problem is that easy money is gone, that investors got hosed on sub-prime. The easy money isn't going to come back. Wall Street is getting out of the MTG biz, and the conservative banks will once again be in charge. The future is large down-payments and good credit for home purchase. The sales volume of 2004 is NOT coming back for a generation or amnesia, whatever comes first.

Look closely at Prineville 81 sales, the inventory there is 27 years at the current rate. 80% or more of prineville is own on speculation.

I think it might be good that the "BULL" printed this story, because it tells those that are bleeding that its going to be 2-3 years, so perhaps more people will sell at any price sooner, which could clear the inventory glut.

I think its going to be a VERY slow process, resets and foreclosures during the next 2-3 years, banks have to auction. Next year when the banks start dumping homes on the market, that's when the bargains will appear and the 'new prices' will be clear to all.

So far in the game its only year one, the Real Estate crowd ran the show the previous year and kept saying things would pick up, they didn't now the builders are saying 2-3 years. I supposed now our elected officials will start also preparing local's for the new reality.

Interest rates are now sky-rocketing all those ARM people will now start realizing that home ownership isn't so cool. With almost 70% home-ownership we need to get back to 60%, that's going to be a lot of pressure on the downside.

Note lastly that the BULL article says that the hope of recovery long term is second generation mexicans.

Bend Economy Man said...

You have to admit it, Bendbust/Bilbo/Pedro really called it with the "count on the immigrants" slant.

But even in this The Bulletin is going to be wrong because it always looks to the recent past to predict the distant future, even as the situation is changing dynamically.

The thing is that extrapolating immigrant household-creation of the boom years is exactly how NOT to predict what's going to happen now that the trends have reversed.

You see all over the place that the unskilled and semiskilled labor market in the US has gone way south for a couple reasons - (1) construction boom has ended in some parts of the country, and is ending in others, and (2) the dollar is nosediving against most currencies, including the peso.

In March 2007, just 3 months ago, 1 dollar bought 11.15 pesos. Now it buys 10.75 pesos and that number is dropping. That's 4% in just 3 months. Mexican inflation is fairly low, ran at a bit over 4% in 2006, roughly 1% in a quarter, so in terms of purchasing power in Mexico, immigrants' wages have fallen 5% in just 3 months.

Anyway the thing is that Bend is so dependent on this party continuing that no one really wants to even consider that the party is over for a LONG while.

I'm not saying Bend is toast, but Bend's real estate boom is toast. I'm sure with good old-fashioned American ingenuity we'll fashion a new basis for our local economy.

Duncan McGeary said...

"You have to admit it, Bendbust/Bilbo/Pedro really called it..."

Oh, my god, there'll be no stopping him.

Mrs Sally Heatherton Esq said...

Hola Gringos,

On the subject of 'mexicans' one interesting stat, and this is very important, that year to date wiring of money 'home' to Medico is down 25%.

The dollar is falling like a rock, 'real inflation', as the dollar is buying less and less, and we're an import nation.

The mexicans are getting double hosed, the construction for gringos has dropped from $45/hr to $15/hr, and mexicans wend slightly up from $7/hr to $10/hr. Now with NO work for anyone the gringos will go down, which means less money for the mexicans.

My personal guess is that our best day of Mexicans ( the great brown hope of central oregon ) was during the boom years.

Yes, there are millions of Mexicans in Cali, and yes they're breeding little 'legals', but UNLESS our City of Bend invests in Spanish Cartoon Channels in LA, I don't think we'll get them.

Don't laugh at the SCC suggestion, if the good City of Bend can spend taxpayer money getting Outside Magazine to rate us #1, then certainly its a good use taxpayer money to fund PR in LA so that second generation bambinos know that bend is exceptional. Think of Bend as "Tijuana with a view".


adios, pedro